16th Apr 2014 09:27
LONDON (Alliance News) - Rolls-Royce Holdings PLC Wednesday said it had reached an agreement with Daimler which puts a fair market value of EUR2.43 billion on the 50% stake in the companies' joint venture that the UK engine maker is buying from the German car maker.
In early March, Daimler had decided to exercise a put option that it had on its stake in the Rolls-Royce Power Systems joint venture, meaning that Rolls-Royce would buy the stake.
At that time, Rolls-Royce had said Daimler's option was valued at about GBP1.9 billion in its balance sheet at the end of 2013, and it would pay for Daimler's stake using cash and its existing funding facilities. At current exchange rates Wednesday, the agreed fair value is worth about GBP2.01 billion.
"We have enjoyed an outstanding working relationship with Daimler and this agreement represents a good outcome for both of our companies. Rolls-Royce Power Systems has added scale and capability to our reciprocating engines business," Rolls-Royce Chief Executive John Rishton said in a statement.
Rolls-Royce expects the deal to complete within the next five months.
Rolls-Royce Power Systems was previously known as Tognum AG. It is based in Germany and makes industrial engines and drive systems. The companies bought the business back in 2011 and agreed the Daimler put option at that time.
Rolls-Royce shares were up 0.6% at 1,015 pence Wednesday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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